Online shopping

Online shopping: is a penny saved a penny earned? Your obsession with shopping discounts can be hurting your money

I’m so tired of all this research, she said. The objective was to find new roses for the garden. A simple online order would have delivered the best bare roots to her doorstep. But she wanted to get the best offer and the best discount. After driving through town and sorting through colors and specimens, she stood there weary but somewhat triumphant at having gotten them for half price. No one had the courage to ask him if it was all worth it.

There’s a big lure to getting a bargain. It gives the impression of having achieved something exclusively intelligent. It was mine because I pursued it with determination, we tell ourselves. If a good product is available at a reduced price, we should make the most of it, we believe. And so the market for discounts and offers thrives, primarily allowing dealers to get rid of inventory they cannot sell, restocking store shelves at the expense of the customer.

But it’s a win-win say my friends. What I want to have is too expensive; I don’t mind waiting for it to be put away. It’s a brand I want to have anyway; it’s a bargain at this price. Who can say that I bought at a discount, etc. In our mind, what is business for us is loss for the seller. We are the smart ones who pick up great value at great prices. There’s no point in trying to pretend that good things don’t come cheap – we despise that statement with pity only for an uninformed buyer.

Those looking for discounts and deals aren’t the type who can’t afford the finer things in life. Their relationship to money is very oriented towards optimization. They can only spend if they can ensure that they have maximized profits. Negotiating with sellers gives the joy of having snatched the last rupee from an adversary in spite of himself, who thought he was smarter. From carpet sellers in Middle Eastern countries to cilantro vendors on the streets, every seller understands this need to make the customer feel victorious.

I remember the first pizzeria in India which opened in Ahmedabad many years ago. It was a trial run after the popular brand sent representatives to see how street vendors in Law Garden generously grated blocks of Amul cheese on everything from sandwiches to dosa. The menu was entirely vegetarian; the ingredients were carefully selected for local tastes, and the tested crust and melty cheese magic had to win. But hardly any sales took place the first week. And then it turned out that Amdawadis don’t just pay a list price. If there is no room to discuss the bhav (price), there was no deal!

Opportunity cost is an important factor in financial decisions. People like to believe that a penny saved is a penny earned. This money could be used for something else; they will argue. Money saved on airfare can be used to fund a fine gourmet meal and maybe a theater ticket, travelers will say. Is there overall optimization for money, that is the question that is rarely asked. Do intelligent individual decisions add up to become an overall optimizer of household wealth and well-being? Should this strategy be applied as a primary tool to improve the happiness quotient? Responses are mixed.

Our behavioral quirks get in the way. What we have too cheap, we do not appreciate too much. Most. If she missed this rose bush, my friend would have forgotten her journey, the journey, the research and the effort. She would only keep the price. She would believe that she fortunately didn’t pay much for the factory which failed to do so. We do not rationally link outcomes to effort when satisfaction with the decision was initially achieved even with the discounted price. So we have clothes on sale that we don’t really like lying around in the back of the wardrobe.

We also end up with more than we could possibly need. We buy because the price is attractive; not because we need it. The mad rush on days when online stores advertise deep discounts fill homes with electronics, equipment, durable goods, decorations, art, tableware, clothing, and every possible item that can become a story. A conversation piece about how smart the buyer had been and how the best deal for something had been made.

But we had foreseen it, we were going to protest. We’ve waited all year with this listing and clicked as soon as we know we got the best discount. It can apply to some things. What about the long list of other things that were also purchased? Would each of these also qualify in the same way? Maybe not. Sellers know hook power, display and pricing. No one walks into a department store with a grocery list. Even if they did, they rarely stuck to it.

So, we end up with a cart full of things we hadn’t intended to buy, but couldn’t resist the store’s offer. Our needs take a back seat and the greed to get the best price takes over. In this process, there is also the testing of a new product, a new flavor, a new variant, and our basket is overflowing. We saw people standing in a corner pulling things out of their carts before they could charge for them. And sometimes reluctantly replacing it. We decide not to do it next time. But then, all is forgotten.

Our money suffers when our spending is driven by the seller and not by us. But psychological satisfaction makes us victims again and again. The ease of online shopping and the painless swipe of electronic payments allow for even faster momentum. Many have gotten into the habit of buying first and coming back later after trying the products. They see themselves as ruthless customers who will settle for nothing but the best and make the most of their buyer privileges.

Our attitude towards money is firmly rooted in our heads. If we feel we’ve had enough, we’ll find ourselves not wanting too much. We may or may not get there even after a long trip filled with unnecessary things bought because we liked the price.

(The author is president of the Center for Investment Education and Learning.)